Former Societe Generale trader Jerome Kerviel Tuesday was sentenced to three years in prison following his conviction in a French court of pulling off one of the biggest trading frauds in history.
The 33-year-old Kerviel was also ordered to pay $6.7 billion in restitution to the French bank and was also barred for life from working in the financial services sector by presiding Judge Dominique Pauthe, according to a report today in the New York Times .
Kerviel, found guilty on charges of forgery, breach of trust and unauthorized computer use, will remain free while his sentence is being appealed.
SocGen did not immediately respond today to a Computerworld request for comment on the conviction. Officials have said they don't expect the full rstitution to be paid.
Kerviel made headlines around the world in January 2008 after Societe Generale disclosed that he had made a series of unauthorized trades that ultimately cost the bank a staggering $7.2 billion. Kerviel's actions exposed Societe Generale to more risk than the financial institution was worth, and almost resulted in its demise.
Kerviel had claimed he acted in the bank's interests and with the full knowledge of officials there. Prosecutors and the bank portrayed him as rogue trader gone wild.
Kerviel, who had been an IT worker at SocGen before being moved to the bank's front office, was charged with making more than 1,000 fraudulent transactions dating back to September 2004.
Prosecutors said that he concealed the fraud by using techniques learned from his ecperience in working with the bank's computer systems and procedures. The techniques were said to allow him to bypass, with relative ease, all the IT and process controls the bank had put in place to detect fraudulent transactions.
In an incident report called "Mission Green," auditors from the bank highlighted five reasons why the bank failed to detect Kerviel's activities despite several signs that, in retrospect, should have been obvious.
The auditors cited a lack of adequate supervision of Kerviel, an overly chaotic environment and a tendency by IT staffers to ignore automated alerts that were generated by Kerviel's unauthorized activities.
Jaikumar Vijayan covers data security and privacy issues, financial services security and e-voting for Computerworld. Follow Jaikumar on Twitter at @jaivijayan , or subscribe to Jaikumar's RSS feed . His e-mail address is email@example.com .
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